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insight. the role of journalists in my view is the role of insight. it will be a long time. here is an example. we had a project inside of google to write things. i suggested, by the way, you could have it write a paper and then you can have it add 7% and then another 7%. it would produce infinitely long papers. it looked at the information and assembles it. it did a pretty good job of a bad author. if you read it and have a good author, you can see the difference. this is where we are. it may be that 50 years from now, the systems will be so powerful that they can replicate the kind of special insight that journalists and reporters and people who are practitioners have, but it will be a long time before that's the case. >> on that reassuring note, thank you. >> thank you very much. [applause]
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>> at that same event hosted by the economist, lynn rothschild and how to make society more inclusive. this is about 25 minutes. >> it is my pleasure to welcome the chief executive of e.l. rothschild to join me for our discussion about capitalism in the world in 2013. [applause] >> thank you. >> apart from being chief executive of e. l. rothschild, you are also co-chair of the henry jackson initiative. that is where we are going to start.
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first of all, why increasing capital? that implies there is a problem with exclusive capital in the first place. >> i want to first thank you for including eric schmidt tonight. their combined ages younger than i am, thank you. eric makes me feel more comfortable. i appreciate that. then henry jackson initiative on inclusive capitalism is a transatlantic, private, bipartisan group that got concerned about the feeling that maybe most people -- that too many people were thinking that capitalism was collusive capitalism.
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those of us who were born in the 1950's or 1960's, and there are not many of us in this room tonight, we grew up believing that we could work hard, play by the rules, and anything was possible. it was called the american dream. george carlin recently said it is called the american dream because you have to be asleep to believe it. we actually think that it is very important to acknowledge that capitalism has been planned economies as the way to move people out of poverty and improve lives. 700 million people since 1980 have been lifted out of poverty,
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largely through one sort of capitalism or another. but at the same time, we have to admit that capitalism in the anglo-american sense has gone off the rails a bit. for us, exhibit a of that is the inequality rate. since the 1980's, when i graduated from law school and enter the work force, my dad worked two jobs and put four children through college and law school and said this is america, you can do whatever you want. i had that experience. since 1980, the top 1% have had an increase in their income of 275%. during the same time, the middle-class, the 60% in the middle, have had an increase of
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40%, and the lowest of 18%. at the same time, in 1980, when i entered the work force, the average ceo was making 40 times the average worker. now the average ceo is making 380 times the average worker. i think the best metaphor i have seen for our problem, which i consider the inequality being one of the most important issues facing this country as well as britain, but larry katz at harvard has the right metaphor for what we are seeing. he talks about american capitalism as the apartment block that was the envy of the world 30 years ago. everyone wanted to copy what
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that was. today, that apartment block has really nice apartments, gated at the top. the middle apartments are crowded and damp. the lower apartments are under water, but the worst part is that the elevator is broken. it is fixing to the elevator that the henry jackson group is about. >> are you you essentially saying that the occupy movement was right in its broad focus on these issues, on the 1% and even 1% of 1%, where it the distribution is even more skewed? >> i think that fundamentally, we are the 99%, is correct. that is why we born to the initiative, because we are not politicians, but we are the
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private sector. we believe that there are things that companies and individuals can do, and that is what we can talk about, to increase the possibility for people to benefit, for more people to benefit from our capitalism. >> your co-chair is domenic barden. he has an interesting article about addressing the issue of youth unemployment, which is one of the things that has gone wrong, the young people do not have opportunities. is that part of the escalator, starting right at the bottom with young people getting on to the latter in the first place? >> what we decided to do was not to be a think tank and not to
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advise government, but to say, what are the things we can do? his article is very interesting. there are 3 million jobs today in america that cannot be filled because we don't have the skills for them. mackenzie interviewed companies and 40% of them said they have jobs to offer, but they cannot find skilled workers. they predict by 2020 around the world there will be 85 million high and medium level jobs that will not have people with the right skills. the point is, what should business do and what is business doing? business should be creating apprenticeships. business opportunities for entry-level people, not as part of philanthropy, but because they know that in order to survive for the long term, they
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need to create opportunities. rolls-royce for instance. for 20 years that had the rolls- royce academy, where they pay people for their first two years to only be an apprentice. that are not going to school for two years and being paid. they go through all of the divisions of rolls-royce, and then they either make it or they don't, but right now, 40% of top management had gone through that apprenticeship program. rolls royce 20 years ago realized they needed to train people for the jobs they had to offer. british gas has done a similar kind of thing. but we have jobs in this country, but we have a skills gap. one of the things the initiative
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talks about and continues to showcase other companies that do work in this area is how to train people for the jobs that are available. >> it seems so obvious that companies would train a work force to have the skills that they actually need. why do you think it is not happening already? >> it is definitely not happening. we had a launch of the initiative here and some people in this room or there. larry summers get a perfect example of how we are not teaching for the skills that we need. are there any surveyors in the audience? oh. very good. john. one person was able to use the trigonometry that we all study in college. none of us had to study probabilities.
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and yet, every day, how probable is it that we are going to go over the fiscal cliff? how probable is it that the doubt is going to go there? -- that the dow will go here or there? for a long time in this country we have not been training for the jobs that are available. in fact you have another interesting article about what michael porter did, surveying where we stand in a comparative since in the world, and our education is below a lot of the rest of the world. >> so young people is one area of focus. a second area that you focus on is small businesses. why does that need to be a particular area of concern, and what can be done about it?
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>> we are highlighting what be companies can, should, and are doing for small and medium enterprises, because first of all, if you are thinking for the long term, you want to broaden your base of suppliers. we think business in its own interest should be helping small and medium enterprises. an example of this is ibm. ibm granted through its foundation in the first instance, gave at $10 million grant to create the supplier connection. they created an internet based place where companies smaller than $50 million of revenue could apply to supply different things, from pencils and paper to widgets in courtrooms, whatever it is. ibm brought in about 20 companies that put their needs on to this website so that small and medium enterprises can expand their businesses.
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small and medium enterprises account for the largest percentage of job growth in our society, but it is our obligation to encourage them and help them thrive. we'll ask eric how he felt when facebook was a small company. >> you are relaxed about that or you think that they should be relaxed about that?
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>> we'll ask eric how he felt when facebook was a small company. >> the third area that you focus on its corporate governance and what part of the issue that has been much talk about is an excessive focus on short- termism, that you think a long- term focus might arise and be more inclusive, help bring more benefits to society. >> in the way that we are saying corporations should invest for the long term by investing in education that is needed for its future, by reaching out to small and medium enterprises. we also need the activity of the investor base to say we are going to invest in companies that think this way, that have a sustainable real-world. on our task force we have jim leach, head of ontario teachers.
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they make it very clear that they measure a company by its long term commitments to the entire ecosystem of its business. the pension plan of holland does the same thing. the new have ceo's you are on board, like one from italy. -- fromunilabor. -- from unilabor. it stopped giving quarterly earnings reports. he said if your interested in long-term growth, sustainability, and a company that takes care of all its stakeholders, by my shares. we think that in order to have corporations do the right thing, we need investors to do the right thing, and create a virtuous circle of inclusive capitalism.
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>> the overarching issue that we deal with in the report is the issue of ethics. if people in business and finance thought about what was right and wrong, i think we would have less resistance to a our form of capitalism today. one of the things about adam smith is, 17 years before he wrote the wealth of nations, he wrote the theory of moral sentiments. he was more a moral philosopher than an economist. it was not hard for him to believe we were good. he believed we were self
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interested, but he believed that free markets and freedom would lead to people doing the right thing because they cared about the reaction of their peers. they cared about common values and a common future. one of the things we have seen since the 1980's is, from greed is good to just incredible opulence beyond what anybody can really justify, that we have lost that sense. like our parents, they were the greatest generation and they sacrificed a lot for us. sometimes i feel like we are going to be the greediest generation. we don't just give people opportunities to get on the
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elevator. >> how do you ensure this really happens, because all the way along the time you are describing, there have been people who preached in business as well. there has been a big rise of rhetoric about corporate responsibility. how are you translate what you have been describing into something that actually spreads on a national or even international scale? the 1% of the 1% are very strong indeed. >> they are very strong indeed.
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we are almost trying to start a movement of individual ways we can do something to help somebody else get a leg up. i think our political system is largely to blame for what you are talking about. se when you say "our" who system do you mean? [laughter] >> god forbid if i refer to your majesty's government. [laughter] the collusion of big business, i don't care if you are republican and democrat, if you are not sick to death of people claiming that they want a smaller government, but taking everything from a carried interest to subsidies for their industries, into their pocket, and if they don't realize or acknowledge or face the fact
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that they are the biggest recipients, there was a cover story on new progressivism. we are not supposed to know who wrote it, but i know who wrote it. [laughter] in that, she talked about the mortgage interest deduction, which is essentially an upper- middle-class tax break, has cost four times what we have spent on low-income housing. people who take that mortgage deduction don't really think i am getting corporate welfare, but we really are. there was saying quote by british chancellor of the exchequer. he said to group of businessmen who were coming in and saying get off my back, we got to have less regulation. he said it you want government to get off your back, then take your hand out of its pocket.
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>> we are going over time, but i want to ask you one question. [laughter] >> i want to eat. >> it is a good one that has been asked by someone at one of the tables. what is the role of women in the inclusive capitalism? thank you for asking that. >> thank you. >> it is not inclusive if you don't include half of the population. >> that is true. and again, age. when i went to law school women were about 50%. women are 50% of college and university graduates, 50% of law school, 50% of medical school. about a third or a bit more of business school.
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we are half of the entry-level, half of mid-level, 35% of the federal reserve board, but we are 14% of corporate boards on the fortune 500. we are 3% of ceo's of fortune 500, 17% of congress. so they are obviously our most powerful women. i have a sort of not politically correct rule on this issue. i think women should stop whining and i think it is time
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that in my experience, women decide not to go often. yes there are stereotypes against us. we can fight against it. women can make it to the top. inre is a book called "loean ." there is nothing in our way except ourselves. i think if we look within ourselves and we are ready to make the sacrifices that anybody has to make in order to get to the top, we can do it. i recently was with the group that received all sorts of metals coming back from afghanistan. one person in the squadron was a woman. the person interviewing the soldier said how do you feel about having a woman as your
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commander? the soldier said, actually, it does not occur to us. we just think of her as a soldier. i think that we can push ahead and we can make it. >> as you know, in europe, this is a very live issue at the european level, moose to have-- moves to have quotas of women at the board room level. i take it from what you are saying you are against quotas of that sort. >> quotas are really an uncomfortable thing for americans. you europeans are more comfortable. [laughter] we want equality of opportunity rather than quality of results. that being said, i was on a fortune 500 corporate board fortune 500 corporate board pretty early in my career

Lynn Rothschild
CSPAN January 12, 2013 8:35pm-9:00pm EST

Series/Special. Discussing business ethics, youth employment and workplace equality. New.

TOPIC FREQUENCY Ibm 3, Henry Jackson 2, Mackenzie 1, George Carlin 1, E. L. Rothschild 1, Jackson 1, Domenic Barden 1, Lynn Rothschild 1, Larry Katz 1, Afghanistan 1, Sustainability 1, Britain 1, Europe 1, Termism 1, Italy 1, Ontario 1, Eric Schmidt 1, Adam Smith 1, Eric 1, E.l. Rothschild 1
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Duration 00:25:00
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Audio Cocec ac3
Pixel width 704
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on 1/13/2013